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Health insurers and health-care providers are going to be pushed to change their way
of doing business faster.

That’s the gist of remarks Health and Human Services Secretary Alex Azar made March
5 to for-profit hospitals, and he’s likely to push even harder on health insurers
March 8. “We are unafraid of disrupting existing arrangements simply because they’re
backed by powerful special interests,” he
told the Federation of American Hospitals (FAH) March 5.

This is Azar’s first signal to the health-care industry of the initiatives that will
be his priorities. Azar, who was president of the U.S. division of drug company Eli
Lilly and Co. before taking over the HHS in January, is making the point that innovations
in payment and delivery systems that the U.S. health-care system has relied on for
decades are lagging too far behind scientific innovations in drugs and other therapies.
Azar is speaking
March 8 to America’s Health Insurance Plans (AHIP).

AHIP to Get Value-Based Message

At both the March 5 FAH conference and the AHIP conference, Azar is addressing value-based
transformation in America’s health-care system, an HHS spokesman told Bloomberg Law
in an email March 5.

“It seems like every other week that [the Food and Drug Administration] is approving
some novel therapy, or [the National Institutes of Health] announces a finding that
revolutionizes how we think about a key piece of biology,” Azar told the FAH, which
represents for-profit hospitals.

“But innovation in payment and delivery systems is simply not proceeding at the same
pace,” Azar said.

A shift from fee-for-service, which is roundly lambasted throughout the health-care
industry as encouraging providers to perform a high volume of services rather than
get better value for patients, began in the 2000s, he noted.

“Yet here we are today—more than a decade later—and value-based payment is still far
from reaching its potential,” he said.

Patient Access to Records

Centers for Medicare & Medicaid Services Administrator Seema Verma and Jared Kushner
of the White House Office of American Innovation will be making announcements March
6 at the Healthcare Information and Management Systems Society conference in Las Vegas
regarding regarding actions the administration will be taking to give patients access
to health records, Azar said.

“Too often, doctors and hospitals have been resistant to give up control of records,
and make patients jump through hoops to get something as basic as an image of a CT
scan,” he told FAH.

“Medical science is rapidly moving towards precision treatments at the level of an
individual’s genes,” Mark Fendrick, director of the University of Michigan Center
for Value-Based Insurance Design, told Bloomberg Law March 5. “Yet our ability to
provide these amazing innovations is in the stone age. I call it Star Wars science
and Flintstones delivery.”

Need Insurer Information

Azar’s message will be even more important to insurers, Joe Antos, a health-care policy
expert at the free market-oriented Washington think tank American Enterprise Institute,
told Bloomberg Law March 5.

“The list price on the hospital is basically irrelevant to everyone,” he said. “The
part about what am I going to have to pay after the insurance company has paid [is]
where he’s going to hit the insurers pretty hard.” Only health insurers can tell people
that, Antos added.

Azar called for giving consumers greater control over health information through health
information technology; encouraging transparency from providers and payers; using
experimental models in Medicare and Medicaid to improve value and quality; and removing
government burdens that impede the change to a value-based system.

The Medicare and Medicaid programs, which accounted for a third of the country’s health
spending in 2016 at just over $1 trillion, must play a “key role” in transforming
the health system, Azar told the FAH. The Center for Medicare and Medicaid Innovation
“vests HHS with tremendous power to experiment with new payment models,” he said.

Demonstration Projects?

Azar trod carefully on the subject of demonstration projects. In November 2017 the
White House scrapped extensions of two mandatory bundled payment models proposed during
the Obama administration but announced a new voluntary bundle in January. “Aggressive
models have not always worked out, so appropriate guardrails will always be essential,”
he said.

“I don’t intend to spend the next several years tinkering with how to build the very
best joint-replacement bundle,” Azar said. “But make no mistake: We will use these
tools to drive real change in our system.”

“We want to look at bold measures that will fundamentally reorient how Medicare and
Medicaid pay for care and create a true competitive playing field where value is rewarded
handsomely.”

He also called out accountable care organizations, which were created under the Affordable
Care Act to try to better coordinate patient care. “The results have been lackluster,”
he said.

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